Despite the fact that Southwest Airlines’ (NYSE: LUV) fundamental metrics are the strongest they have been in a long time and the shares are dirt cheap, the stock has spent most of 2015 torturing the bulls. While oil prices are still relatively low, their recent jump helped knock the stock 25% off its January highs in less than four months. Then, after a brief bounce, LUV was driven to a new year-to-date low following a slew of negative stories. First, the airline launched a huge, “unexpected” fare sale on June 2. The aggressive sale went… Read More

Despite the fact that Southwest Airlines’ (NYSE: LUV) fundamental metrics are the strongest they have been in a long time and the shares are dirt cheap, the stock has spent most of 2015 torturing the bulls. While oil prices are still relatively low, their recent jump helped knock the stock 25% off its January highs in less than four months. Then, after a brief bounce, LUV was driven to a new year-to-date low following a slew of negative stories. First, the airline launched a huge, “unexpected” fare sale on June 2. The aggressive sale went viral and brought millions of people to the Southwest site to look at tickets. Overwhelmed by traffic, the website crashed. It was not functioning properly for nearly a day and a half, leaving thousands unable to book travel online, and phone lines were busy as well. #-ad_banner-# Southwest extended the sale in the hopes of capturing additional business, but in the end this blunder was a huge positive catalyst that got shot down. More selling hit airlines when American Airlines (NASDAQ: AAL) lowered its second-quarter outlook this week. Meanwhile, Southwest CEO Gary Kelly… Read More

I recently learned that hot water can freeze faster than cold water. Perhaps you already knew this but it was news to me. It’s a phenomenon known as the Mpemba Effect. This Mpemba Effect seems counterintuitive. Water freezes at 32 degrees. Since cold water is closer to 32 degrees than hot water, most would assume that cold water freezes first. Yet it has been studied extensively by scientists and experiments have shown hot water can freeze first. This isn’t true 100% of the time, but it does happen when the conditions are right. There are a number of theories about… Read More

I recently learned that hot water can freeze faster than cold water. Perhaps you already knew this but it was news to me. It’s a phenomenon known as the Mpemba Effect. This Mpemba Effect seems counterintuitive. Water freezes at 32 degrees. Since cold water is closer to 32 degrees than hot water, most would assume that cold water freezes first. Yet it has been studied extensively by scientists and experiments have shown hot water can freeze first. This isn’t true 100% of the time, but it does happen when the conditions are right. There are a number of theories about why this occurs. The leading explanation is that hot water evaporates more than cold water, leaving less water to freeze. It could also be due to convection currents, which are stronger in warmer water, allowing for ice crystals to spread faster. Others believe it may be related to the chemical structure of water. In all likelihood, it is the interplay of various factors. #-ad_banner-# You might be asking what this has to do with investing. To me, the Mpemba Effect illustrates that logic alone may not be enough to find the right answer. You have to dig… Read More

One of the best income strategies in the world involves a market some investors completely ignore. It allows individual investors to generate income from the best companies in the world without buying stocks most of the time. I’ve been recommending trades in this market for over two years. And so far, the results have been astounding — each of the 85 trades I’ve closed has been a winner. I don’t want to beat around the bush or make this sound like some super-secret investing strategy only I can tell you about. I am talking… Read More

One of the best income strategies in the world involves a market some investors completely ignore. It allows individual investors to generate income from the best companies in the world without buying stocks most of the time. I’ve been recommending trades in this market for over two years. And so far, the results have been astounding — each of the 85 trades I’ve closed has been a winner. I don’t want to beat around the bush or make this sound like some super-secret investing strategy only I can tell you about. I am talking about selling options. Now, before you decide that you never want to try options trading, let me show you what a recent subscriber to my Income Trader newsletter, which focuses on selling options, had to say about my strategy: “When I first started using [Amber’s] picks, my goal was to earn $500. Then I quickly realized I can earn at least $1,000 per month. I use the profits to buy more… Not only are your picks excellent with low risk, it teaches you to look for other options on your own, which I have… Read More

Investors hate this industry. Pension funds do, too. In fact, the industry is so hated that some funds aren’t allowed to own the companies involved. But for the last 115 years, these companies have been the best performing stocks in the United States — despite stiff competition from sectors like healthcare, technology and energy. And today, while most investors shun these stocks, you could use them to earn more than 20% annualized. And here’s the best part… you won’t even have to buy shares. Let me explain. Investment bank Credit Suisse recently conducted a study on the best-performing industries in… Read More

Investors hate this industry. Pension funds do, too. In fact, the industry is so hated that some funds aren’t allowed to own the companies involved. But for the last 115 years, these companies have been the best performing stocks in the United States — despite stiff competition from sectors like healthcare, technology and energy. And today, while most investors shun these stocks, you could use them to earn more than 20% annualized. And here’s the best part… you won’t even have to buy shares. Let me explain. Investment bank Credit Suisse recently conducted a study on the best-performing industries in the United States since 1900. Here’s what they found: One dollar invested in the U.S. stock market in 1900 would have been worth $35,255 at the end of 2014. That comes out to an average annual return of 9.6%. Not bad. However, one dollar invested in the tobacco industry in 1900 would have ballooned to $6.28 million by the end of 2014. That’s an average annual return of 14.6%. No other industry has come even close to delivering that kind of return. The second-best performing group was electrical equipment, but tobacco outperformed these stocks by a factor of 10. It… Read More

Higher interest rates are setting up to be one of the major market themes of 2015. Global rates are surging, and despite the fact that the International Monetary Fund (IMF) urged the Federal Reserve to hold off on increasing the fed funds rates, investors remain on edge. This is wreaking havoc on the bond market, sending prices plummeting as investors sell bonds with lower fixed rates. The iShares 20+ Year Treasury Bond ETF (NYSE: TLT) has lost more than 10% over the past two months. #-ad_banner-# Stocks in the S&P 500 are not doing that much better,… Read More

Higher interest rates are setting up to be one of the major market themes of 2015. Global rates are surging, and despite the fact that the International Monetary Fund (IMF) urged the Federal Reserve to hold off on increasing the fed funds rates, investors remain on edge. This is wreaking havoc on the bond market, sending prices plummeting as investors sell bonds with lower fixed rates. The iShares 20+ Year Treasury Bond ETF (NYSE: TLT) has lost more than 10% over the past two months. #-ad_banner-# Stocks in the S&P 500 are not doing that much better, down 2% from their May high, and investors are scrambling to cover their portfolios in the event of higher rates. But one sector stands to benefit from the increase in yields. It booked the second highest earnings growth in the first quarter and could jump when second-quarter results come out. Risks remain but options traders can take advantage of a powerful strategy to minimize losses while amplifying potential returns into 50%-plus profits by the end of summer. Interest rates can be a mixed bag for companies in the financial sector. While low rates drive down borrowing costs, they also limit… Read More

“Sell in May and go away” is one of those trite pieces of investment advice that traders would be wise to not follow blindly. This year, the Dow and S&P 500 finished up 1% in May, and the Nasdaq rose nearly 3%. That being said, I did warn my Profit Amplifier readers of one thing they definitely should sell in May. It wasn’t a stock, but a country that is struggling to sustain economic growth — and I saw a chance to make big profits. #-ad_banner-# Weak Economic Foundation Makes This Market Susceptible GDP… Read More

“Sell in May and go away” is one of those trite pieces of investment advice that traders would be wise to not follow blindly. This year, the Dow and S&P 500 finished up 1% in May, and the Nasdaq rose nearly 3%. That being said, I did warn my Profit Amplifier readers of one thing they definitely should sell in May. It wasn’t a stock, but a country that is struggling to sustain economic growth — and I saw a chance to make big profits. #-ad_banner-# Weak Economic Foundation Makes This Market Susceptible GDP growth in China and Hong Kong has been steadily declining since December 2011. Hong Kong’s growth dropped from 8% in the first quarter of 2012 to 2.1% in the first quarter of 2015. As a quick note, the city of Hong Kong is part of the country of China, reverting to Chinese rule from British rule in 1997. Hong Kong and China’s legal and governmental relationship is complex but they are economically intertwined, with Hong Kong and Shanghai being the financial hubs of the country. The chart below shows the trajectories of year-over-year GDP growth for China, Hong Kong and… Read More

Over the past few decades, we’ve seen many advances in how the stock market functions. Today, exchanges and brokerage houses exist almost entirely online, and everyone is competing for microseconds of speed. We’ve also seen the idea of “investing” evolve into something much more advanced and complicated than it was in the early days. I’ve spent my entire 18-year career immersed in the finance world. And in my experience, no matter what data, methods, techniques, witchcraft, mojo or voodoo you choose to use for your investments, it is absolutely critical that you understand what you’re doing. If not, you’re just… Read More

Over the past few decades, we’ve seen many advances in how the stock market functions. Today, exchanges and brokerage houses exist almost entirely online, and everyone is competing for microseconds of speed. We’ve also seen the idea of “investing” evolve into something much more advanced and complicated than it was in the early days. I’ve spent my entire 18-year career immersed in the finance world. And in my experience, no matter what data, methods, techniques, witchcraft, mojo or voodoo you choose to use for your investments, it is absolutely critical that you understand what you’re doing. If not, you’re just another amateur grasping for success. The truth is, today’s “game” requires an increased arsenal of tactics and methods to prosper. And for the average investor, a powerful options strategy is one tool that should be used. #-ad_banner-# Options can be as simple or as complicated as you want to make them. Just know that when you purchase options as a means to speculate on future stock price movements, you are limiting your downside risk, yet your profit potential can be unlimited. Aside from speculation, investors use options for hedging purposes. It is a way to… Read More

Over the past few decades, we’ve seen many advances in how the stock market functions. Today, exchanges and brokerage houses exist almost entirely online, and everyone is competing for microseconds of speed. We’ve also seen the idea of “investing” evolve into something much more advanced and complicated than it was in the early days. I’ve spent my entire 18-year career immersed in the finance world. And in my experience, no matter what data, methods, techniques, witchcraft, mojo or voodoo you choose to use for your investments, it is absolutely critical that you understand what… Read More

Over the past few decades, we’ve seen many advances in how the stock market functions. Today, exchanges and brokerage houses exist almost entirely online, and everyone is competing for microseconds of speed. We’ve also seen the idea of “investing” evolve into something much more advanced and complicated than it was in the early days. I’ve spent my entire 18-year career immersed in the finance world. And in my experience, no matter what data, methods, techniques, witchcraft, mojo or voodoo you choose to use for your investments, it is absolutely critical that you understand what you’re doing. If not, you’re just another amateur grasping for success. The truth is, today’s “game” requires an increased arsenal of tactics and methods to prosper. And for the average investor, a powerful options strategy is one of those tools that should be used. #-ad_banner-#I realize some of you may have never considered using options in your own portfolio. That’s OK. I want to use today’s essay to explain some of the basics and demystify options so that you can use them to amplify your profit potential and limit the downside. Read More

Whether it’s possible to beat the market has been the subject of much research and debate by academics and practitioners. Perhaps you’ve heard of the Efficient Market Hypothesis (EMH), which was developed around the 1960s. This academic theory states that a stock’s current price reflects all known information about that stock. This means stocks are always perfectly priced, and price changes occur efficiently as new information becomes available. Academics will tell you that, based on this theory, it’s impossible to beat the market by picking stocks. #-ad_banner-# Yet, people do. We know… Read More

Whether it’s possible to beat the market has been the subject of much research and debate by academics and practitioners. Perhaps you’ve heard of the Efficient Market Hypothesis (EMH), which was developed around the 1960s. This academic theory states that a stock’s current price reflects all known information about that stock. This means stocks are always perfectly priced, and price changes occur efficiently as new information becomes available. Academics will tell you that, based on this theory, it’s impossible to beat the market by picking stocks. #-ad_banner-# Yet, people do. We know Warren Buffett has beaten the market for more than 50 years, as just one example. In response to the EMH, Buffett argues that there are “wide discrepancies between price and value in the marketplace.” But EMH proponents argue that Buffett is an anomaly. It turns out researchers have uncovered a number of anomalies to the EMH. They have found that stocks with low price-to-earnings (P/E) ratios or PEG ratios outperform the market over the long run, and they named this the “value anomaly.” Small caps generally outperform large caps, which results in the “size anomaly.” Stocks that have beaten… Read More

At the end of February, I made the case for a looming market correction based on slowing economic data, downward revisions in corporate earnings growth and the S&P 500’s high price-to-earnings (P/E) ratio.  Over the following two weeks, the S&P 500 dropped more than 3% before trading back up and hitting new all-time highs. But I don’t think we’re in the clear yet. Here’s why I foresee a market correction in the coming weeks and a potential way to profit. During the first quarter, the companies of the S&P 500 delivered another lackluster performance, with net earnings rising a paltry… Read More

At the end of February, I made the case for a looming market correction based on slowing economic data, downward revisions in corporate earnings growth and the S&P 500’s high price-to-earnings (P/E) ratio.  Over the following two weeks, the S&P 500 dropped more than 3% before trading back up and hitting new all-time highs. But I don’t think we’re in the clear yet. Here’s why I foresee a market correction in the coming weeks and a potential way to profit. During the first quarter, the companies of the S&P 500 delivered another lackluster performance, with net earnings rising a paltry 2.4% year over year while revenue contracted 3.7%. Take out financial stocks and total earnings growth would have actually contracted 1.2% year over year. And it doesn’t look like things are getting better. #-ad_banner-#Second-quarter earnings growth expectations have fallen over the past four months from 1.1% to a loss of 6.4%, according to Zacks estimates. What concerns me even more is that markets have moved higher while earnings growth is basically flat and future earnings estimates are dropping. This has caused the S&P 500’s forward P/E to increase from 17.62 in February to 18.02 today. That’s the highest reading in… Read More